Eurozone industrial production slumps

Industrial production fell sharply in the Eurozone in March, official data showed on Monday, missing forecasts for a far smaller decline.

According to Eurostat, the European Union’s statistical office, industrial produced in March fell 4.1% – the lowest reading since October 2021 – and by 3.6% across the wider bloc.

It reversed February’s gains, when production increased 1.5% in the Eurozone and 1.4% in the EU, and was well below consensus for a 2.5% fall.

Among individual members, Germany – the bloc’s largest economy – recorded a 3.1% decline, reversing February’s 2.5% rise. In France, industrial production fell by 1.1%, and by 0.6% in Italy.

In contrast, Spain saw a 1.4% increase.

The overall figure was dragged sharply lower by Ireland, which recorded a 26.3% slump. Eurostat noted that the country was carrying out a review of the seasonal adjustment methodology it uses.

Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said: “Ireland, where transfer pricing practices of multinationals can lead to big swings in the industrial production figures, led the decline. But there was weakness elsewhere too.

“Overall, Eurozone industrial output slide by 0.2% in the first quarter, more or less repeating the 0.3% decline in the fourth quarter. The data suggest little in the way of a boost to Eurozone industry from China’s reopening, which has been predominantly in services.

“In April, we have to expect some rebound in the Irish data, but we will still think industry will remain weak in the second quarter overall.”

Bert Colijn, senior economist at ING, said Ireland’s computer, electronics and optical products industry had recorded a 50% slump in production in March.

He continued: “This industry is generally volatile and therefore tends to overstate the trend. Still, most large economies outside of Ireland also posted declines, albeit smaller.

“For the months ahead, the outlook for industry looks feeble. While lower energy costs are a clear boost to the more energy intensive industries, weak demand remains a concern across the board.”

Year-on-year, industrial production in March fell by 1.4% in the Eurozone and by 1.3% across the entire EU.